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How President Putin Has Given a Boost to U.S.-EU Trade Talks

by Edward Alden
March 25, 2014

U.S. President Barack Obama participates in a G7 leaders meeting in the Hague March 24, 2014 (Kevin Lamarque/Courtesy Reuters). U.S. President Barack Obama participates in a G7 leaders meeting in the Hague March 24, 2014 (Kevin Lamarque/Courtesy Reuters).

When President Obama first announced his trip to Europe two months ago, the main topic was supposed to be trade, particularly the difficult ongoing negotiations to form a new Transatlantic Trade and Investment Partnership (TTIP). But when he meets Wednesday in Brussels for the first U.S.-European Union summit in more than two years, most of the discussion will be about Ukraine and the Russian annexation of Crimea.

The change in plans underscores a critical point about trade negotiations–whatever the economic motivations, trade is an integral part of U.S. foreign policy. And the events in Ukraine have served to make the current set of trade negotiations much more important, and as a consequence, more likely to succeed.

Trade has long been driven in no small part by U.S. geopolitical aims. The General Agreement on Tariffs and Trade, launched in 1947, was intended to build a strong economic partnership to counter the growing communist bloc. The first U.S. bilateral free trade agreement was with Israel in 1986. The decision to launch a new round of global trade talks in Doha, Qatar in 2001 was meant to send a clear message that, despite the 9/11 attacks, the United States remained committed to expanding trade ties with the Arab Middle East. And U.S. support for admitting China and Russia to the World Trade Organization was as much about tying those countries to the existing international order as it was about freeing trade.

But with the break-up of the Soviet Union and the end of the Cold War, trade has become increasingly separated from U.S. diplomacy. For better or worse, trade deals are now assessed by Congress and the American public almost solely in terms of their economic impact on Americans, not on their foreign policy implications. That has made such agreements harder to negotiate, and harder still to move through the U.S. Congress.

President Bill Clinton’s ambitious plans for a Free Trade Area of the Americas linking North and South America never got off the ground; President George W. Bush was unable to make any progress in the Doha Round talks, and his signature bilateral deals with Korea, Colombia and Panama languished for several years and had to be renegotiated before winning congressional approval. President Obama today faces a Congress in which almost every member of his own party is opposed to giving him the negotiating authority he needs to conclude the TTIP and a companion deal in Asia, the Trans-Pacific Partnership (TPP).

The events in Ukraine could change that. With European fears of Russian revanchism growing, the United States needs to demonstrate unequivocally the strength of its commitment to Europe. The TTIP, which several weeks ago looked like a detailed, bureaucratic negotiation over tariffs and regulatory rules with the promise of modest economic pay-offs, has now become a test of the transatlantic partnership. And that is a test neither the United States nor the European Union can afford to fail.

Similarly, with the crisis in Europe, the TPP negotiations have become virtually all that is left of the Obama administration’s much-touted “pivot to Asia.” The president has been forced by the events in Ukraine to once again place Europe at the center of U.S. security concerns. But at the same time, the administration cannot afford to turn its gaze so far that it offers China a free hand in Asia. So the TPP, currently bogged down in talks over such issues as how much beef and rice Japan might import in the future, has suddenly become a measure of the strength of the U.S. commitment to Asia. As with the European talks, neither the United States nor its Asian allies can now afford a failure.

Those cheering for the success of both negotiations will be heartened by the suddenly improved odds for success. I personally would have preferred a debate over the economic merits of the deals, which should be able to stand up to the scrutiny of their many critics. But with international trade, the dividing line between economics and geopolitics has always been faint. Thanks to President Putin of Russia, the line has almost been washed away.

Post a Comment 4 Comments

  • Posted by finn

    TTIP aims at a transfer of law making powers from the souvereign, the people, to a cartel of international corporations. Now, being allied to the US is not a value by itself. When it comes at the cost of Democracy, it is less desirable than no alliance at all or – should that be impossible – equally desirable as an alliance to some other Democracy-hostile system like Russia. One might actually reason that allegiance to Russia in such a scenario is the lesser evil, as it would at least prevent a weapon laden frontier through Europe, which obviously increases the chances of war on this continent. If the Brusseles and Washington elites impose TTIP on Europe, knowingly against the will of the European people and without their Democratic representation in the process (which is what is currently happening, how else can the secrecy towards non-corporation represenatives and the insistence of de Gucht that national parliaments need not ratify TTIP to make it law), it is hard to imagine that the people will let the EU survive.

  • Posted by L_M

    I definitely agree with “finn” on his/her statement.

    Unfortunately, I think that the government systems are so well established and far from being in direct contact with the “normal” citizens that the decision if going with the US or Russia will be made at a very high level.

    Those politicians are unaware of how life feels as a “normal” citizen, and are easily corrupted by agents of influence. If the money flows correspondingly, then they are in for the ride. The consequences don’t matter … why should they, since the heavy lifting will be carried by the “normal” citizens.

    So, it will come to another global war. Hopefully many lives will be spared.

    The only good thing is that the majority of people nowadays are internationally connected and learned from history. They know pretty much what is going on and at the right time they will act.

    The things will be pulled straight then and we’ll be able to enjoy globally a more peaceful Earth.

  • Posted by Alexis de Pleshcoy

    One of the greatest concerns in a “Renewing America” initiative should be the lack of any kind of public discussion in what concerns international trade agreements.
    January 1, 2014 marked 20 years of NAFTA. There were no public celebrations, no common session of the Congress where the Presidents instrumental in negotiating and passing the agreement would be invited.
    For the 2014 elections, I haven’t heard anybody taking credit for or criticizing NAFTA. Worse, I haven’t heard anybody linking NAFTA to TTIP and/or TTP; many running in Congress elections ask for a mandate to go and cleanup Washington, but nobody is saying that TTIP must be passed (or rejected).
    This shows a very serious deficit in participatory democracy, a systemic problem, the inability to have a public discussion on what really matters.
    TTIP and TTP negotiations began a long time ago, and few people ever heard of them; they have just been told that “commerce is good” (which is of course true, but the devils is in the details; it was truly true in 1945, when the world economy was concentrated here). These treaties will affect the lives of millions without giving them any idea of what is going to happen, without giving them any say. For TTIP there are some studies showing a net gain of around $500 per family, written by PhD’s in the economics arts (colleagues of those who gave the global economy the 2008 financial disaster); they are most likely wrong, plus they never take into account the time/cost for the economic system to stabilize.
    What is even more concerning is that TTIP and TTP are seen as tools which go beyond economic calculation (the author cautions against it). The EU, the wealthiest entity in human history, with 500 million plus people, with advanced technology, social mobility, (and so on) needs the US commitment to protect them against Russia, beyond NATO? (Russia is smaller than the EU in any metric.) Wouldn’t it be far more appropriate for them to immediately increase military spending (although negotiations are always better), and buy military equipment from the US? Can’t they borrow for example from Norway’s SPU (Government Pension Fund), around a trillion, in exchange for a quick path to full EU admission (admission which will again be rejected in a referendum, happened twice before), and use that money to invest in their defense? Haven’t they learnt anything from the break-up of Yugoslavia?
    Moreover, there is TTP which is supposed to show commitment to Asia, to counteract a rising China. First and foremost, can’t we publicly discuss how it was possible for China to become an economic superpower in two decades (never seen in world history)? Did outsourcing play any role, or not – would be an interesting topic of collective debate; another would be at what hourly rate will each corporation bring back the jobs?
    On a separate note, before TTIP was even contemplated, it should have been noted that the EU capitalism is one based on Adam Smith’s vision, and it might not interact well with one based on Milton Friedman’s.

  • Posted by Morten

    Strange how Finn and L_M can comment on the loss of Sovereignty and the non-Democratic process of TTIP.

    No Bilateral Trade Agreement ever negotiated by the EU has been non-democratically imposed on any EU citizen and TTIP will be no exception.

    You should know that the negotiation is led by the European Commission based on a mandate given by the European Council (democratically elected).

    During the negotiation process the European Council and the European Parliament (also democratically elected) are being kept informed through very regular information meetings.
    Once the negotiation has been finalized a legislative proposal will be elaborated by the European Commission which will go for a democratic vote in the European Council and the European Parliament. If this legislative proposal pas these two democratically elected institutions certain parts of the agreement can principally be temporarily applied, but only once the 28 EU member state governments have ratified the proposal can it actually be implemented.

    Hence, until the legislative proposal has passed 30 different democratically elected instances it cannot be implemented.

    No other process in the world is as democratic as this.

    Enjoy it, as it is a luxury that can so easily be lost….especially when not understood….

    To Finn I can only suggest that he moves to Russia for a while until he has understood what the word democracy really means in theory and in practice.

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